By Julie Ann Bittner, President / CEO, TRICOM

Over the past several months, staffing owners have indicated an overwhelming increase in open orders but are struggling to find candidates to fill them.

This trend has not only been impacting staffing companies — employers all over the U.S. are having trouble finding staff to fill open positions. This lack of workers is hurting small businesses and impacting their ability to survive. Small businesses are being forced to turn down business due to staff shortages. In the past few weeks, I have seen countless signs in restaurants and coffee shop windows indicating adjusted hours or additional days they are closed due to staff shortages.

Employers are having trouble competing with the federal government’s unemployment payments, which are paying individuals more to stay home and not work rather than find a job.

In a recent podcast with David Searns of Haley Marketing, David noted that, “Demand for talent is through the roof but supply is really low.”

Why is the labor market so tight recently? “Literally to the day, we watch data on people applying to our client’s websites. We read the data from Indeed. We are on top of what is happening out there, and it was March 11, 2021 that we noticed a shift.”

Significantly, March 11th was the day the third stimulus package was signed extending the federal government unemployment benefits to unemployed Americans. In addition, the third stimulus package provided a family of four making an Adjusted Gross Income (AGI) up to $150,000 or less $5600 in disposable income ($1,400 per taxpayer plus $1,400 per dependent child). Along with changes to ACA costs and COBRA costs, the stimulus package made it very favorable for individuals to stay home and collect unemployment.

What can be done to solve this labor shortage issue?

States Ending Federal Unemployment Benefit Expansion

Earlier this month, South Carolina announced it would join Montana in ending federal pandemic unemployment benefits for its residents in June. CNN reported, “The Republican governors of both states say the enhanced jobless programs are dissuading people from returning to the workforce and are creating a labor shortage.”

Montana and South Carolina are the first two states to terminate participation in the federal expansion of unemployment insurance. On June 27th, Montana will stop issuing the $300 weekly federal supplement to jobless residents. However, the state will provide a return-to-work bonus of $1200 to individuals who find full-time employment for four weeks, paid for with government funds. South Carolina will follow by terminating its participation to the program on June 30th.

While Montana and South Carolina were the first states to terminate federal unemployment expansion, as of May 18, at least 16 states will be joining their ranks in June or July, and additional states may follow soon.

On May 13, 2021, Governor Doug Ducey of Arizona and the Division of Employment Security (DES) announced Back To Work programs to help individuals transition from unemployment to a new job, and ensure those currently receiving unemployment have support available to help them in this critical step forward.

In Arizona, Ducey said the state would set aside $300 million in federal money to offer a one-time bonus of $2,000 to people who get a full-time job, while those who return part-time will receive $1,000.

“In Arizona, we’re going to use federal money to encourage people to work, instead of paying people not to work,” Governor Ducey said.

The clients I spoke with are hopeful that these steps will have a positive impact on the labor shortage.

Crystal Blackwell, CEO of Staffing One in Atlanta noted, “Within a few hours after Governor Kemp [in Georgia] made the announcement regarding changes to federal unemployment benefits, our phones began to ring. Candidates that were either ghosting us or not available to work, were suddenly available for an assignment.”

Marianne Trotter, President & CEO of Accessible Medical Staffing, had a similar experience, “I just spoke with both of my offices regarding the Federal unemployment dollars going away, and we are seeing a slight change already.”

Marianne continues, “In the Indy office, we had three inactive employees call to reactivate. Two of the three immediately submitted necessary paperwork, and the third individual just needs to submit one credential, and she will be ready to work. This tells us they are serious about working. In the past two weeks, we sent each of them an email asking if they were ready to work, telling them we have full-time and overtime hours for them. We are concluding that the emails, plus the news of the Federal dollars going away may have influenced these decisions.

“In the Iowa office, two individuals called on Saturday to reactivate. These two stopped working for us because their main employer did not want employees working at other facilities during COVID. The thought was to try to mitigate employee exposure to COVID situations. Since COVID is so controlled and minimal in health care situations now, they can come back to work for us. While this example is not related to the Federal dollars, it does show how there is movement and change in work situations.”

Currently, the list of states discontinuing participation in federal expansion of unemployment benefits stands as follows:

Reinstating Unemployment Requirements

During the pandemic, states waived many of the requirements surrounding applying for and continuing to receive unemployment benefits. Recently, many states have begun requiring those receiving unemployment benefits to show they are actively searching for work and increasing requirements to continue receiving payments.

What is on the horizon?

The Child Tax Credit

The stimulus package we talked about earlier (The American Rescue Plan (ARP) of 2021), signed into law on March 11, 2021 also included significant changes to the Child Tax Credit.

Beginning on July 15th, households with children aged 17 or under will be receiving a monthly payment from the expanded and newly advanceable Child Tax Credit from the ARP. This one-time Child Tax Credit expansion for the 2021 tax year will provide eligible parents $300 per month for each child under age 6, and $250 for each child ages 6 to 17, including children who turn 17 in 2021.

Will this have the same impact as the federal expansion of the unemployment benefits?  It may be too early to tell but staffing owners and business owners will be watching unemployment numbers for the next several months.

Following is an outline of what one state, Arizona, is doing to further incent workers back into the labor force. Other states may follow with similar incentives or other plans to address the issues specific to the workers of their states.

Return-to-Work Bonuses

As I stated earlier, Arizona will set aside $300 million of federal resources to offer a one-time bonus of $2,000 to certain eligible individuals who return to the workforce and get a full-time job, while those who return part-time will receive $1,000. The bonus will be awarded when the individual has stopped filing for unemployment benefits and completed at least 10 weeks of work with an employer, and will be offered on a first-come, first-serve basis. It will be interesting to note if other states follow this lead.

Education Incentives

The State of Arizona will also provide $7.5 million for community college continuing education scholarships for currently unemployed workers who are eligible for the Return-to-Work bonuses, as well as $6 million for GED test preparation and exam fees for eligible workers without a high school diploma.

Child Care For Returning Workers

The lack of available and affordable childcare while schools were closed during the pandemic also played a factor in whether or not individuals returned to work. To address this issue, Arizona will provide three months of child care assistance for individuals with children who return to work after collecting unemployment benefits. To be eligible, an individual must have already filed for unemployment benefits, and earn $25 per hour, equivalent to a yearly salary of $52,000, or less at their new job.

States are actively working to remove the barriers that are keeping employees from returning to the workforce. In addition, there are strategies that staffing companies can use to help expand the talent pool and recruit quality candidates for open positions.

To hear more about these strategies, check out TRICOM’s latest Insights with Insiders podcast with David Searns of Haley Marketing. David and I discuss the four pillars of recruitment marketing to lure candidates back to the workforce. Click here to listen!

Sources:
https://www.cnn.com/2021/05/06/politics/montana-pandemic-unemployment-benefits/index.html  May 7, 2021 Tami Luhby CNN
https://des.az.gov/back-to-work-program
States Opting Out of Federal Unemployment Benefits (natlawreview.com)
Indiana Will End Federal Unemployment Benefits In June As Jobs Go Unfilled (wfyi.org)